Canadian dollar claws back losses as oil rises, Fed signals patience

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FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015./File Photo

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Tuesday, reversing an early decline as oil prices rose and Federal Reserve Chairman Jerome Powell signaled patience on raising interest rates further.

The price of oil, one of Canada’s major exports, rose as OPEC was expected to stick to production cuts despite pressure from U.S. President Donald Trump. U.S. crude oil futures were up 0.7 percent at $55.87 a barrel.

U.S. Federal Reserve Chairman Jerome Powell said rising risks and soft economic data should not prevent solid U.S. growth this year, but the Fed will remain “patient” in deciding on further interest rate hikes.

At 11:13 a.m. (1613 GMT), the Canadian dollar was trading nearly unchanged at 1.3190 to the greenback, or 75.82 U.S. cents. The currency traded in a range of 1.3185 to 1.3236.

The loonie steadied a day after it notched its strongest price in nearly three weeks at 1.3113 before turning lower as oil prices slumped. Over coming days, Canadian markets will watch domestic economic data which could guide expectations for next week’s interest rate decision by the Bank of Canada.

Canada’s inflation report for January is due on Wednesday and fourth-quarter gross domestic product data is due on Friday.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 3.5 Canadian cents to yield 1.764 percent and the 10-year climbed 17 Canadian cents to yield 1.875 percent.

A Bank of Canada working group proposes expanding the range of transactions used in the calculation of the Canadian Overnight Repo Rate Average (CORRA) interest-rate benchmark, according to a consultation paper published by the central bank.